Canada has imposed retaliatory tariffs on a wide range of US goods, raising concerns that the escalating trade dispute between the two countries could become prolonged.
The counter-tariffs, which took effect on Tuesday, cover nearly C$28 billion worth of American products, ranging from steel and furniture to cotton T-shirts, with rates reaching as high as 50%.
Fresh fish and lobster were initially included but were later removed following pressure from Canada’s seafood industry, highlighting the economic challenges facing Ottawa as it retaliates against its largest trading partner.
Canadian and US officials have both expressed a desire to reach a deal, but negotiations have remained stalled since talks collapsed in late August.
Canadian Prime Minister Mark Carney said last week that Ottawa remained committed to securing a “durable” agreement that would serve the interests of both countries.
“We’re ready to sit down and strike that deal when the Americans are ready,” Carney said.
US Trade Representative Jamieson Greer, however, said the responsibility for restarting negotiations now rests with Canada.
“We offered them the best deal, they looked at it square in the face and turned around,” Greer said in an interview with Fox News.
Greer also cautioned Canada against further retaliation, suggesting that Washington could respond by restricting imports of some Canadian products.
The dispute escalated further on Monday when US President Donald Trump threatened to halt all US business with Canadian aircraft manufacturer Bombardier unless the company moved its manufacturing operations to the United States.
Bombardier is one of Canada’s largest companies and contributed more than C$7 billion to the country’s annual GDP in 2024, according to a report commissioned by the company from PwC.
Trump has also criticised Canada in a series of posts on Truth Social, including one in which he described the Canadian-US exchange rate as “unacceptable.”
Another post featured a map showing Canada, Mexico and Greenland covered by the US flag.
Canada and the United States have the world’s largest bilateral trading relationship, valued at nearly $900 billion in 2025.
With new US tariffs and Canadian counter-tariffs now in effect, businesses on both sides of the border are preparing for further disruption.
The United States currently imposes a 25% tariff on Canadian cars and trucks, as well as tariffs on Canadian steel, aluminium and lumber.
In late August, Trump also imposed new 50% tariffs on other Canadian goods, including dairy products, alcohol, hockey sticks and perfume.
Canada’s latest counter-tariffs, described by Carney as “dollar-for-dollar”, apply to hundreds of American products entering the country.
They come on top of existing Canadian retaliatory tariffs on finished American cars and trucks that do not comply with the free trade agreement between Canada, the United States and Mexico, known as USMCA in the US and CUSMA in Canada.
Polls indicate that a majority of Canadians support retaliatory measures against the United States.
However, economists have warned that the latest tariffs could increase consumer prices for everyday goods, including clothing, food and furniture.
The Canadian Chamber of Commerce has urged the government to adopt a targeted approach to retaliation. “Businesses understand retaliation but don’t want to see endless escalation,” the Chamber’s President and CEO, Candace Laing, said, adding that businesses were preparing for the dispute to last.
Canada’s fisheries industry successfully pushed for changes to the tariff list, with dozens of seafood products removed to minimise unintended consequences for the domestic economy.
The Canadian and US lobster industries are particularly interconnected, with American-caught lobster often transported to Canada for processing before being returned to the US market.
The tariff escalation comes despite signs of resilience in the Canadian economy.
Canada’s gross domestic product grew by 3.3% in the second quarter, while the country added 181,000 jobs between April and July.
However, approximately 41,000 jobs were lost in August, a period that coincided with the introduction of new US tariffs and the collapse of trade negotiations.
Manufacturing recorded a modest increase during the period, which the Canadian government attributed partly to consumers and businesses purchasing more domestically produced goods.
Carney has also pledged to reduce Canada’s dependence on the US by diversifying the country’s export markets.
Figures for July showed that the proportion of Canadian exports destined for the US had fallen to 66%, compared with an average of about 75% before the trade war.
As both governments maintain their positions and negotiations remain stalled, Canadian businesses are increasingly preparing for the possibility that the trade dispute could persist for months or longer.
Erizia Rubyjeana
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